FB Pixel no scriptFoundation Ventures closes its debut fund to invest in early-stage Egyptian startups | KrASIA

Foundation Ventures closes its debut fund to invest in early-stage Egyptian startups

Written by MENAbytes Published on   5 mins read

Over a year old, Foundation Ventures is operated by three former investment bankers who are claiming their stake in a maturing investment ecosystem.

Egypt’s startup ecosystem has grown multifold in the last few years, both in the number of deals and the total value of investments raised by startups. Fawry became the first billion-dollar tech company in the country just a year after its debut on the local stock exchanges, and there are outliers like Swvl and Vezeeta that have gone on to become the leading players in their categories across the region.

With the growing number of startups and investible opportunities, the number of tech investors pouring cash into Egyptian startups also continues to grow. We’ve seen many new players try to fill gaps in funding at different stages. Foundation Ventures is the latest name to join Egypt’s VC ecosystem.

Founded by three young Egyptians—Mazen Nadim, Omar Barakat, and Ziyad Hamdy, who were previously investment bankers—the early-stage VC fund that focuses on Egyptian startups has been operating quietly for over a year. Earlier this week, it told MENAbytes that it has closed its debut fund. The firm did not disclose the size of the fund, but told us that it was oversubscribed.

Who’s on the team?

All three general partners of Foundation Ventures have a background in finance. Mazen Nadim and Ziyad Hamdy started their careers with a leading Egyptian financial services company, EFG-Hermes, working on the sell-side of investment banking. They eventually started a private equity firm focusing on import substitution and opportunistic investments, and in 2019 partnered with Omar Barakat to launch Foundation.

Barakat previously worked for a Cairo-based private equity firm, BPE Partners, as an associate. During his time there, he covered different sectors, including real estate, oil and gas, renewable energy, and non-banking financial services.

All three of them have invested in technology startups as angel investors before starting Foundation Ventures.

The firm also includes HOF Capital and BPE Partners as its general partners.

Investment thesis

Foundation Ventures invests in pre-seed to Series A startups in Egypt. Mazen Nadim told MENAbytes that their average check size is USD 300,000, with the possibility of following on in future rounds of their portfolio companies.

He said that the fund is sector-agnostic. “The ecosystem in the region is still not at a place where any fund can be dedicated to a single sector, in our view. We are sector-agnostic and we map out markets and themes and try to identify high potential opportunities. And while we try to monitor these trends and shifts in consumer and market behavior, we believe more in founder-led insights. Learning from entrepreneurs about their solutions to particular problems is what excites us the most.”

Mazen added that at the pre-seed stage, they like to back high-caliber founders who possess insights about a particular market. “We’re willing to back them before they go to the market or gain any traction.”

Foundation Ventures prefers to lead investment rounds, but also doesn’t mind taking part in an already structured deal. “We believe that the best way for the ecosystem to mature and grow is through a collaborative approach, and this is why we love club deals and working closely with other local and regional investors.”

What does Foundation look for in startups?

Ziyad Hamdy told MENAbytes that they seek strong and capable teams that are dedicated full time to the venture, “We’re on the lookout for full-time founders who are articulate in discussing the company and their vision for it, have built strong technical teams (complemented by an operationally competent CEO), and have a solid understanding of their target market.”

He also explained that they like to back founders who want to focus on building enduring companies instead of looking for an exit.

“We try to look for startups that are solving a challenging high-value problem, can offer a big improvement over incumbent solutions, and build long-term defensibility,” added Ziyad.

At seed stage, Foundation looks for measurable traction, user engagement, and evidence of market acceptance. It expects the startups to have identifiable target customers and a monetization strategy, scalability, and a capital-efficient business with favorable unit economics.

What’s different about Foundation?

As the number of investors looking to deploy money in startups across the region increases, the founders are starting to have the luxury of choosing their investors. What it means for investors—both angels and institutions—is that they have to ensure they bring more than just money to the table.

Foundation Ventures dubs itself as a firm that’s highly focused on added value. “Our fund construction strategy is built around the idea of playing a supporting role to the startups and de-risking through adding value. FV has a very wide network of enterprise partners that our portfolio companies can tap into, allowing them to unlock immediate growth and access wide distribution channels,” said Omar Barakat.

He also stated that the network of Foundation Ventures extends through their LP’s ownership stakes in a broad range of industries and geographies. “These companies serve as potential clients and potential strategic investors for our portfolio companies. This large network can help our portfolio companies expand their geographical and market reach, product offering, and in business development activities.”

“We like to remain highly engaged with the teams we back. Once invested, we ensure that we dedicate enough time and resources supporting the founders, we basically become employees in the companies we invest in and try to help the team we invest in in any way we can,” added Omar.

First investments

Foundation Ventures has already made four investments—only one of which has been announced publicly. It led or co-led all the four rounds it invested in. The investments include several Egypt-based startups:

  • Capiter is a B2B e-commerce marketplace co-founded and led by Swvl’s co-founder and former COO Mahmoud Nouh. The startup had started with a lending product, offering cash flow solutions to small retailers, but has recently expanded its offerings to launch a B2B marketplace as well for grocery stores in Egypt. Foundation Ventures led Capiter’s recently closed investment round.
  • NowPay is a financial wellness platform that enables employers to offer salary advances to their employees without any burden on their cash flow. It recently secured USD 2.1 million in a seed round co-led by Foundation Ventures.
  • Minly is an online platform that’s building the Cameo for the Middle East and North Africa, enabling fans to buy shoutouts from their favorite celebrities.

The fund has also invested in a logistics startup that has been operating in stealth mode.

This article was originally published by MENAbytes.


Auto loading next article...